Gold futures fell to a three month low in New York as the dollar’s rally reduced demand for the precious metal as an alternative investment. The euro fell to an eight month low against the greenback on mounting budget concerns in countries such as Greece, Spain and Portugal. Gold capped a fourth straight weekly loss and the ninth decline in the past 10 weeks.
“The dollar just keeps gaining momentum,” said Tom Schweer, a senior market strategist at LaSalle Futures Group Inc. in Chicago. “Gold could fall another $20 to $40 before people start to load up again.” Gold futures for April delivery fell $10.20, or 1 percent, to $1,052.80 an ounce on the New York Mercantile Exchange’s Comex unit. Earlier, the most-active contract touched $1,044.50, the lowest price since Nov. 2. The metal declined 2.9 percent this week, paring its gain to 15 percent in the past 12 months.
Bullion may fall to $800 before rebounding to a record when investors realize the U.S. government has exhausted tools to revive the economy, said Tom Winmill, a New-York based portfolio manager of the Midas Fund. In December, he predicted gold may average $1,500 in the fourth quarter of 2010. Yesterday, gold tumbled 4.4 percent, the most since Dec. 1, 2008, while the dollar jumped 1.2 percent against the euro.
The MSCI World Index of equities and the Reuters/Jefferies CRB Index of 19 raw materials fell for the third straight day. Some investors may continue to sell gold to cover losses in other markets, analysts said. The Standard & Poor’s 500 Index dropped as much as 1.8 percent, after plunging yesterday by the most since April. The metal has posted nine straight annual gains, reaching a record $1,227.50 on Dec. 3.....Read the entire article.
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